The government has chosen state-run GAIL (India) Ltd over Reliance Industries in setting up a Rs 2,500 crore (Rs 25 billion) gas cracker project in Assam.
"The ministry of petroleum and natural gas, in a meeting on August 13, decided to tap GAIL to set up the project in tie-up with Assam government," senior company officials said.
The project, to be set up at Dhuliajan in the next five years, would involve setting up a facility to separate methane (C2) from 5 million standard cubic meters per day of the gas available from Oil India Ltd and modification of LPG plant of GAIL to produce C2+liquid from 1.35 mmscmd ONGC gas.
It would also involve building facilities to produce 300,000 tonnes a year of ethylene and 200,000 tonnes of high density polyethylene.
The petrochemical project, envisaged as part of the Assam accord, was to be implemented by Reliance Assam Petrochemicals and was a joint venture between Assam government and Reliance.
The project, however, ran into problems due to concerns over subsidies, gas price and the non-availability of raw materials.
The officials said the combined C2+liquid would form the feedstock for the gas cracker to obtain ethylene which in turn would be used for the production of HDPE/LDPE.
The existing GAIL-LPG recovery at Lakwa has been modified to produce C2 which will be sent through 105-km pipeline to Dhulijan for processing at a petrochemicals complex.
Apart from the indigenous gas, GAIL is reportedly basing its plans considering the anticipated availability of gas from A-1 exploration block in offshore Myanmar.